The Bakun Dam is Back

Borneo Project News Report

The Bakun Dam, the largest civil engineering project Southeast Asia has ever seen, has been dogged by controversy and financial troubles since its inception. More than once, the dam was thought to have been cancelled. But in late February, Prime Minister Mahathir Mohamad announced that the Bakun would not only be completed, it would be built at the original 2,400 kilowatt (kW) size. The dam, which will flood an area of forest the size of Singapore, is being constructed in the remote interior of Sarawak, on the island of Borneo.

This surprise announcement has dismayed economists who have warned that there is no market for so much electricity. Sarawak and neighboring Sabah both use only 30 percent of all the energy currently available. The 2400kW output would be 2.5 times more than the projected peak demand for Sarawak and Sabah combined.

When the dam was approved in 1994, up to 90 percent of the energy was intended for export to Peninsular Malaysia via a 250-mile underwater cable. This idea was scrapped when it became apparent that such a cable would be too technically difficult and expensive to build.

Without the cable, where will the electricity go? The government says it hopes to sell the excess energy to Brunei and the Indonesian province of Kalimantan. However, oil-rich Brunei and Kalimantan already have all the electricity they need – and at rates much lower than in Sarawak. Furthermore, there are no transmission lines to these places.

Why then, is the dam being built? In a word, politics. The announcement to revive the dam comes with a general election scheduled for September. The ruling party hopes the dam will win votes by promising jobs and pumping money into the economy. Already, a half-billion dollars has been spent on the project. Further construction will cost $2.5 billion plus cost overruns.

According to the Melbourne Age, the company most likely to win the lucrative contracts to build and operate the dam is the CMS Group, which is owned by the family of Sarawak Chief Minister Abdul Taib Mahmud. During his 20 years as chief minister, Taib has made billions of dollars. The family’s timber concessions alone are estimated to be worth approximately $12 billion. Taib directly or indirectly controls all the media outlets in Sarawak and has been the major force pushing for the full-sized dam. CMS Cement is the only company eligible for the cement contract. Another CMS subsidiary is expected to receive valuable construction contracts, while Bank Utama (a CMS subsidiary) is likely to help finance the project.

With more than 40 subsidiaries involved in infrastructure development – from water supply to steel making – the CMS Group stands to make a fortune from the dam. The Far Eastern Economic Review reveals that most of the remaining companies placing bids on dam work are owned by, or have close ties to, Malaysia’s prime minister, finance minister or other politically powerful people.

Already, 10,000 people have been driven from their ancestral homes and placed in a relocation village to make way for the dam. The dam’s flood zone encompasses an area shared by at least 12 protected animal species and 93 protected plants. There are also concerns that the dam will lower water levels and degrade fish habitats and fisheries on the Rajang, Sarawak’s longest river.

Ironically, while the Bakun Dam will produce more energy than anyone can use, most villages bordering the Bakun Reservoir will remain without electricity, since none of these villages have ever been connected to the power grid.

What is needed are smaller hydroprojects, each capable of supplying power to villages a mile or two away. Such small, local projects don’t block rivers or displace people: they produce power where it is needed.

There is one remaining obstacle that could stall the Bakun: the government doesn’t have the money to build the dam and no foreign investors have stepped forward. In an act of desperation, Malaysian officials announced on April 15 that the dam’s construction would be financed with government-backed bonds.